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Irwin Kellner
Jan. 12, 2010, 12:01 a.m. EST · Recommend (3) · Post:
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Luxury looking brighter
By Irwin Kellner, MarketWatch
PORT WASHINGTON, N.Y. (MarketWatch) -- Notwithstanding all the money Washington has poured into the United States economy over the past year, few, if any, new jobs have been created.
A little over a year ago a massive stimulus package was signed into law by President Obama, who asserted that it would keep the unemployment rate from rising above 8%. Hello? The jobless rate is now 10% with no sign that it is about to plateau.
Little wonder why. Only about 20% of the $787 billion package actually reached the economy and of this only a tiny sliver has gone directly into job creation. ( See Irwin Kellner's May 26, 2009 column.)
Undaunted, the administration is soldiering on.
The president now wants to give business a tax credit of $2.3 billion to create 17,000 manufacturing jobs generating clean energy. This works out to a whopping $135,294 per job -- not very cost-effective, if you ask me.
Meanwhile, the U.S. economy is still hemorrhaging jobs. Some 15 million people are out of work today -- twice the number who were unemployed in December 2007, the start of the recession.
And the top-line jobless rate of 10%, high as it is, is only the tip of the iceberg. If you include discouraged workers, those who can only land a part-time job and those employed below their skill level, the underemployment rate is close to 25% -- the highest in at least seven decades.
Once a job is lost, it's tough to find a new one.
Today there are more than six people per job opening compared with less than two in 2007. Long-term joblessness is at a record high; the average duration of unemployment is a record-smashing 29 weeks. And 40% of the jobless have been out of work for six months or more.
This has driven the share of the population that is employed down to the lowest level in at least 25 years. To make matters worse, many of those who do have jobs have not received a raise in years, while some have even been forced to take a pay cut as a condition of holding onto their jobs.
It goes without saying that without good jobs people won't spend. And without good demand, business won't hire, thus putting the nascent recovery into harm's way.
To avoid a double-dip recession, the government needs to focus laser-like on job creation. My column of Nov 10, spelled out what the government should do to create jobs while on Dec 15, I pointed out what the government is doing that is actually hindering job creation. ( See Irwin Kellner's Nov. 10, 2009 column.) ( See Irwin Kellner's Dec. 15, 2009 column.)
To see how I would jump-start demand, go back to my column of January 19. ( See Irwin Kellner's Jan. 19, 2009 column.)
Almost a year ago, I wrote that Washington should send to everyone 16 years and older a gift card loaded with $3,000. This had to be spent within a short period of time; it could not be saved, used to pay off debt or transferred to someone else.
It would have been cheaper than the stimulus package, more cost-effective and would have created jobs quickly according to the demands of the market place -- not some politician.
This is a simple, common-sense idea. It is also free of politics -- which is why it hasn't been tried.
Irwin Kellner is MarketWatch's chief economist.
- Artyonthespot | 1:19 a.m. Today1:19 a.m. Jan. 12, 2010
The last to fall may be the first to come back. Luxury jeweler Tiffany & Co. says its sales during the November-December holiday selling season jumped 17% and raises its forecast for the fiscal year.
12:06 p.m. Today12:06 p.m. Jan. 12, 2010 | Comments: 3
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